Techs shiver while Dow idles - 2-5-99

KevinN. Marder

January jobs growth strong Techs shiver while Dow idles

In Friday's economic tidings, the government reported that 245,000 new nonfarm jobs were added to the nation's payrolls in January, while the unemployment rate held at 4.3 percent, equalling a 28-year low. Most forecasters had expected 150,000 job additions and a 4.4 percent jobless rate. See full story.

"It's a strong report, though it's not a blowout report like in December," said M. Cary Leahey, managing director and U.S. economist at Primark Decision Economics.

"If U.S. economic growth is slowing, it's not slowing much past 2.5 percent or 3 percent. And the first quarter may show even stronger growth than that."

Capping one of the roughest weeks in recent memory, took it on the chin for the fifth consecutive session Friday, bitten by the energetic jobs report. Supply concerns in the form of next week's $35 billion refunding auction also took a toll. The 30-year Treasury fell 24/32, to yield
TYX, -1.12%
5.342 percent.Its yield stood at a record low of 4.691 percent in early October.

Up and down the technology corridor, players pelted stocks with losses in Friday's morning session. In particular, the sector's bellwether names, pillars of the market's breathtaking runup out of the Oct. 8 lows, were bruised. But better buying was seen in the afternoon, and most stocks closed well off their lows.

"The focus of the worry of valuation is large-cap technology, where the valuation is extreme, and in Internet stocks," Johnson said. "There hasn't been a mass exodus or a rush to the exits from large-cap technology, but there's been a subtle shift away."

The losses in computer-related shares came in the footsteps of Thursday's thick setbacks. Then, concerns of a brewing price war in the semiconductor arena squeezed shares of nearly every technology segment.

Advanced Micro Devices (AMD)
AMD, +3.56%
shed another 2 1/8 to 16 13/16, bringing its loss on the week to 27 percent. Thursday, the maker of microprocessor chips said it will probably record a first-quarter loss. Most analysts surveyed by earnings compiler First Call Corp. had predicted a profit of 13 cents a share. AMD blamed pricing problems tied to its market share battle with Intel.

The initial public offering calendar was heavy, with six companies taking their bows Friday. Pacific Internet (PCNTF)
pcntf
zoomed 31 to 48. The Singapore provider of Internet services sold 3 million shares at the top end of its anticipated price range of $15 to $17 each.

Modem Media.Poppe Tyson (MMPT)
mmpt
vaulted 29 to 45 in its public debut. The interactive ad agency sold 2.6 million shares at $16 each. See full story.

Delphi Automotive Systems (DPH)
DPH, +0.00%
, a unit of General Motors, rose 1 5/8 to 18 5/8 after selling 100 million shares at $17 each in its IPO. The world's biggest auto parts manufacturer had initially expected the shares to be priced between $15 and $18. See full story.

In another IPO, Del Monte Foods (DLM)
dlm
gained 5/8 to 15 5/8 after selling 20 million shares at $15 apiece. The food and beverage producer had expected its shares to come public between $14 and $16.

A few pockets of the market provided shelter from the liquidation in the technology arena. Basic resource groups like chemicals
CEX, +0.62%
, and energy
$xoi
look increasingly attractive to money managers seeking segments poised to benefit from the U.S. economy's stand-up growth.

"Now, portfolio managers are actually going to do something about the valuation worries," said Johnson. "And you see some selling stocks, particularly large-cap technology names, and raising cash. Others are shifting to other sectors, so you see basic materials companies like chemicals, aluminums, and papers doing better."

CBS Corp. (CBS)
CBS, -1.32%
climbed 5/16 to 36 1/8 after the media interest recorded fourth-quarter operating earnings of 2 cents a share. A survey of analysts by First Call Corp. had indicated a consensus estimate of a penny a share. Higher advertising revenue at its television and radio stations bolstered results. CBS Corp. holds a significant stake in MarketWatch.com Inc., the publisher of this Web site. See full story.

SCI Systems (SCI)
SCI, -2.21%
descended 7 5/8 to 35 5/16. Fiscal second-quarter profits totaled 48 cents, 2 cents leaner than what the First Call Corp. consensus view of Street analysts had called for. The electronic component manufacturer said "market conditions and pricing in several product areas appear to be degrading somewhat." It cautioned that March and June quarter revenue and earnings figures will not meet earlier expectations but should meet or exceed year-earlier results.

Sterling Commerce (SE)
SE, -0.43%
matched the First Call Corp. consensus prediction with its fiscal first-quarter net of 33 cents a share. The developer of business-to-business electronic commerce software earned 26 cents in the same period a year ago. But the shares sagged 9 15/16 to 32 1/2 after a few Wall Street research analysts frowned on the company's revenue figures. See full story.

Avid Technology (AVID)
AVID, -3.00%
sailed ahead 3 33/64 to 32 after blowing away most Street predictions with its fourth-quarter operating net of 57 cents a share. A survey of research analysts by First Call Corp. had called for 22 cents. The company said its success was due to favorable domestic and European demand for its film and video products. Avid provides digital audio and video tools for creating content for information and entertainment applications.

In other specific issues, CD Radio (CDRD)
cdrd
surrendered 7 1/8 to 25. It pushed back the launch of its broadcast service by six to nine months beyond the previously scheduled date of the second quarter of 2000. The developer of satellite-delivered radio systems cited equipment delivery delays by some of its suppliers as the reason for the postponement. Lehman Brothers sliced its price target to $55 from $76. See full story.

Shop At Home (SATH)
sath
rose 3 7/16 to 25 1/8. It will broadcast its home shopping program on the DISH network of Echostar Communications.

Internet stocks fell for the fourth day in the last five. But Lycos (LCOS)
lcos
rose 7 5/8 to 137 after trade publication The Industry Standard, citing sources familiar with the situation, reported that General Electric's (GE)
GE, +1.82%
NBC unit may buy a 35 percent stake. GE stock fell 2 1/8 to 98.

Electronic broker E*Trade Group (EGRP)
EGRP, -0.18%
contracted 4 9/16 to 48 15/16 after experiencing computer system problems for a third day. Spokesman David Murray said service was partially disrupted for a short time during the noon hour (Eastern time). See full story.

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